The Income Tax Appellate Tribunal Mumbai bench recently pronounced that Export incentives are not Includable while computing eligible profits for deduction under Section 80IC of the Income Tax Act, 1961.
The bench including Judicial Member Saktijit Dey and Accountant Member Ramit Kochar in their recent order ruled so while allowing the appeal of revenue.
In the present case, assessee is engaged in the business of manufacturing of Textile, Cement, Chemicals, and Power Generation etc. The AO had reason to believe that income chargeable to tax has escaped assessment due to failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment which led to the issuance of notice under Section 148 of the Income Tax Act.
The assessee in reply to the notice submitted that original return of income submitted should be treated as in response to notice u/s. 148. The assessee also added that while submitting the aforesaid return, he claimed for a deduction under section 80 IC while computing eligible profits.
The sole issue in the instant appeal was whether export incentives to the tune of Rs. 2, 36, 32,653/- to be eligible while computing profits eligible for computing deduction u/s. 80IC. This raised the rival parties for re-opening the assessment. The AO found the aforesaid matter contrary to the decision of apex court in the case of Liberty India v. CIT (2009) 317 ITR 218(SC) which led to an escapement of income leading to reopening of the concluded assessment u/s 147 of the 1961 Act.
The bench accepted the contention of assesse that concluded assessment could not be re-opened as the issue regarding deduction u/s 80IC was subject matter of appeal before CIT (A) and hence original assessment order of the AO stood merged with appellate order of CIT (A).
The tribunal bench, while upholding the order, held that export incentive to the tune of Rs. 2,36,32,653/- shall not be included for the purposes of computing eligible profits derived from the industrial undertaking for computing deduction under Section 80IC of the Income Tax Act.
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